HCI
HCI Group, Inc.
$203.10
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 25.5% below fair value
You pay
$203.10
Bear
$207.78
Fair
$272.72
Bull
$314.71
Bear
$207.78
+2.3%
ROTCE 20.0% → 2.64x TBV
Fair
$272.72
+34.3%
ROTCE 25.0% → 3.47x TBV
Bull
$314.71
+55.0%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
30.6%
10.1%
Key Value Driver
ROTCE (30.6%) vs. cost of equity (10.1%)
Implied Market Multiple
2.58x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$230.00
Divergence from AlphaVal
19%
Summary
With ROTCE of 30.6% vs. 10.1% cost of equity, fair P/TBV is 3.47x on $78.68 tangible book, implying $272.72 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly